Fed Governor Waller advocates for continued rate hikes, including a potential 0.5% increase in December, citing concerns over broad-based price pressures and persistent inflation risks.
Fed Governor Waller on Tuesday signalled more tightening is needed, openly backing a possible half-point December hike if October core CPI is around 0.3% or higher, and at least a quarter-point move even on better data. The hawkish tone (FXS Speechtracker 8.6/10 vs 7.2/10 average) supports a higher-for-longer rate path, which lifts the Dollar. A V-shaped USD recovery was already visible during the remarks.
Waller's hawkish message, including openness to a half-point December hike and warnings of persistent producer and energy price pressure, pushes markets toward a higher-for-longer Fed rate path. US yields typically rise on such repricing, which would push the 10-year yield higher.
Federal Reserve Governor Christopher Waller signaled a hawkish shift, stating that further policy tightening is necessary to combat persistent inflation. Waller explicitly supported a half-point rate hike in December if October core CPI prints at 0.3% or higher, and a minimum quarter-point increase even if data improves. The remarks triggered a V-shaped recovery in the US Dollar as markets reprice the Fed's path.
Waller said more rate hikes are needed and would even support a half-point hike in December if October core CPI comes in around 0.3% or higher, which pushed markets to price a more aggressive Fed tightening path, lifting the US Dollar.
A more hawkish Fed message, with support for further hikes in December, tends to push rate expectations and therefore Treasury yields higher in the near term.